A few weeks ago, CONTEXT revised down its overall 2023 forecast for
revenue sales growth through European IT distribution. It was lowered
from 1.6% growth for the year to -3.3%, and a big part of that
decision was influenced by the feedback we received on commercial
bookings. The cumulative impact of the war in Ukraine, the high cost
of living, the cost of capital and high interest rates has led to
sinking business confidence—not just in the EU but also China and the US.
This in turn has had a significant impact on the enterprise storage
and server markets. But there’s also optimism that things may turn
around by the end of the year.
The enterprise server market experienced a notable YoY decline in
revenue sales growth in Q1 (3.8%) and an even bigger drop in Q2 2023
(-11.7%). The latter figure was much greater than even our pessimistic
forecast of +1.6% for the quarter. Performance was worst in the UK
(-38%) and Italy (-29%), although it held up in in Spain, France and
Germany. Volume sales growth fared little better, declining -21%
across Europe distribution. This was driven by a 26% YoY drop in the
Decline in the storage space has been flatter overall in recent
quarters thanks to seasonal upgrades. But revenue growth fell
significantly from 17.3% in Q1 2023 to -9.5% in Q2, thanks largely to
the poor performance of the storage array segment (-13%) and
especially hybrid and flash arrays. The HCI segment recorded a slight
revenue increase in Q2 of 2.9%, thanks to strong performance in the UK
(15%) and Italy (53%).
Continued economic uncertainty remains a dark cloud hanging over the
commercial market, and will negatively impact both server and storage
revenues for the remainder of the year. CFOs will need to carefully
balance demand for new technologies and projects against reduced
budgets. Other factors potentially influencing revenue sales are
component pricing and availability, especially in AI-ready components.
Comparatives from last year will also likely drag down server and
storage growth figures for the rest of 2023. Those double-digit server
sales in 2022 are not going to be replicated in 2023, as they were
driven mainly by the clearing of backlogs last year.
However, there are still reasons to be optimistic. Inflation is
slowly receding across the EU and there remain opportunities for the
channel thanks to enterprise digital transformation efforts, public
sector investments, product refreshes and the drive for
sustainability. We’re hopeful of an improved 2024.
To access the full forecast, please request the report here.
© CONTEXT 2023